Capital Markets

Rea Vipingo shareholders likely to take the higher offer price


Rea Vipingo sisal estate in Kilifi County. FILE

Centum has taken the pole position in the battle for control of Rea Vipingo, according to analysts who expect the sisal firm to remain listed at the Nairobi Securities Exchange.

Analysts told the Business Daily that the Sh75 bid by Centum is more attractive compared to the offer of Sh70 per share by Rea Trading Company (REAT) despite the latter having a sweetener of Sh15 per share if the land held by Rea Vipingo is sold in the next five years.

Analysts expect the shareholders to lay emphasis on the offer price, with Centum’s pledge to keep the firm listed seen as a prospect for further price gains.

“The Sh15 does not factor inflation rate and the appreciation value of the land. It could have been more favourable if it was a floating rate,” said Genghis Capital research analyst Silha Rasugu.

Success of either of the bids means rejection of the other given the success thresholds are set at 75 per cent for REAT and 25 per cent for Centum.

REAT, however, is looking for a lower number of shareholders to make their bid successful compared to Centum.

Brothers Richard and Jeremy Tobinow currently own 57 per cent of the company, requiring to convince shareholders holding 18 per cent of the company for their bid to be successful.

Centum whose stake is 0.5 per cent leaves it needing of 24.5 per cent for its offer to be acceptable.

READ: Centum ups stakes with sugarcoated bid for Rea Vipingo

REAT also has a historical knowledge of the sisal market, especially through Wigglesworth & Co Limited, a marketing company it controls.

Centum is trying to set up an agri-business.

Both bidders intend to carry on with the sisal business but are expected to dabble into real estate.

Failure by the two bids to meet the set threshold could open another round of bidding with Vania Limited — whose bid of Sh80 was rejected for being time barred — waiting on the wings.

Some shareholders may reject the two bids on hopes that they can squeeze a better deal in a second round of bidding.

According to the Standard Investment Bank, Vipingo’s real value stands between Sh101.21 and Sh168.72 a share.